Carmel Capital Management L.L.C.’s consistent portfolio management process provides the structure and discipline to help weather turbulent markets, avoiding the emotional pitfalls that can trap investors during periods of market volatility and economic uncertainty. Investing is a marathon, not a sprint, but securing reliable long-term returns for our clients requires intensive examination, monitoring and evaluation of each client’s unique life circumstances and aspirations. Money management must be guided by a broad combination of factors including investor goals, life stage, tax exposure, personal responsibilities and preferences, as well as realistic expectations. We take the time to get to know our clients; this makes the difference between managing other people’s money and managing money for people we know well.
A comprehensive evaluation of business fundamentals is the heart of our process. We view every potential investment, large or small, as though we are acquiring the entire business. This keeps us firmly rooted in a long-term perspective, able to target strong, undervalued businesses, then confidently ignore short-term noise and wait patiently until the market catches up with our investment rationale. We are driven by business fundamentals, valuations, and client objectives, not news headlines or market hype. Our fundamental research profiles for specific financial characteristics and possible catalysts for future growth and market recognition. Our proprietary fundamental analysis and quantitative research narrows the field further to an emphasis list, to which we apply extensive due diligence, including direct company contacts and/or meetings. We pursue companies that are highly focused on their market and as a consequence, are often in leading and defensive market positions. Our rigorous due diligence process is broadly diversified across industries, sectors and geographies.
Another cornerstone of Carmel Capital Management’s investment philosophy is value. We seek to build wealth through the purchase of high-quality underpriced securities. We utilize “bottom-up” research to identify and purchase stock in companies that are undervalued compared to their earnings prospects and intrinsic value. Firms are evaluated for low absolute, historic, comparable and relative multiple of sales, earnings, cash flow and book value. We believe a focus on quality and underpriced businesses materially improves our margin of safety and our long-term compounding potential. Our value approach to security selection is a conservative strategy that requires a long-term orientation and patience.
Risk management is a crucial part of our investment process. The focus on intrinsic over market value, combined with our exhaustive vetting practices and over thirty years of expertise, helps to mitigate security selection risk. We vigilantly monitor our positions, participate on all institutional conference calls, diversify our industry and sector exposures and diligently reevaluate our investment thesis in an ever-changing competitive and regulatory landscape.